Clamping down on kleptocrats

Filed under - Asset recovery

Posted 8 November 2011
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On 29 September 2011, just off the Champs-Élysées in Paris, 11 sports cars worth US $5 million were seized by French police. They are part of the great wealth believed to have been amassed in France by the Obiangs, the ruling family of Equatorial Guinea, an oil-rich country where over 70 per cent of the population lives below the poverty line.

President Obiang is one of three African leaders whose assets in France are under investigation, the result of years of activism and a landmark legal decision allowing Transparency International France and Sherpa to start judicial proceedings, a precedent that could be replicated all over the world.

Corrupt leaders and their stolen assets

Many countries around the world have suffered the greed of corrupt leaders who put private gain before public good: embezzling public funds and natural resource wealth, or taking bribes from special interests.

These leaders are also abetted by an international financial system that does too little to prevent money laundering. Even governments with the political will to attempt to recover stolen assets face a long struggle.

US $1.3 billion
– the value of stolen assets corrupt Nigerian army leaders were able to launder through UK banks that failed to carry out due diligence on political clients.
(UK Financial Services Authority)

Going to court to end impunity

It was a report by French NGO CCFD/Terre Solidaire – warning that 30 developing countries have lost over US $100 billion and recovered less than 4 per cent of it – that inspired legal action in France against the luxury assets of three foreign heads of state along with their relatives:

  • Denis Sassou Nguesso (Congo-Brazzaville)
  • Omar Bongo Ondimba (Gabon, now deceased)
  • Téodoro Obiang (Equatorial Guinea).
Country Corruption Perceptions Index rank (2010)
Source: Transparency International, CPI
UN Human Development Index rank (2010)
Source: Human Development Report
Gross Domestic Product (2010), US$
Source: IMF
Congo-Brazzaville 154 137 12.03 billion
Equatorial Guinea 168 136 14.5 billion
Gabon 110 106 13.14 billion

 

Preliminary police investigations gave a hint of the scale of the illicit wealth held between them:

  • 180 bank accounts
  • almost 60 properties in locations like Paris’ upscale 16th Arrondissement
  • 18 cars worth a total of more than US $8 million

For three years, a legal process to decide whether NGOs and foreign citizens could go to a French court to target assets owned in France by foreign leaders pitted Transparency International France and Sherpa against the French public prosecutor.

A year ago, on 9 November 2010, a French court decided that a case against the three leaders should go ahead. The confiscation of luxury sports cars should be just the beginning of this case.

The confirmation of the right of NGOs to be parties to such cases, meanwhile, is a new beginning for anti-corruption activities the world over.

In November 2010, Transparency International recognised the efforts of Gabonese citizen Gregory Ngbwa Mintsa to start an investigation of Bongo’s assets in France, despite harassment and arrest.

This year’s Integrity Awards ceremony will take place in Vienna on 24 November.

Stolen assets and the Arab Spring

This case may be the tip of the iceberg. Transparency International France and Sherpa were back in French courts sooner than expected, to call for investigations into stolen assets from Tunisia, Egypt, Libya and Syria.

TI France’s complaint against deposed Tunisian president Ben Ali and his relatives brought immediate results: French prosecutors seized a private jet and €12 million.

Show me the money

While international financial centres like Switzerland, Canada, the US and UK have frozen at least US $50 billion in assets from Arab Spring countries in 2011, the total scale of assets involved could be even greater. Read more on the Transparency International blog.

Preventing theft in the future

Transparency International France and Sherpa won the three-year struggle to start an investigation of stolen assets thanks to the right of NGOs to be party to such cases enshrined in the UN Convention against Corruption, which the French court recognised in its decision.

The other 153 countries that, like France, have ratified this UN treaty should make sure that they also allow NGOs to pursue similar action.

NGOs would not need to resort to court procedures if governments did more to freeze and recover stolen assets, or better yet, to prevent money laundering, embezzlement and bribery in the first place. Transparency International recommendations to the Group of 20 (G20) leading economies therefore also include:

  • better cooperation with countries whose assets may have been stolen,
  • holding banks and financial institutions liable for failing to ensure that they do not accept dirty money,
  • more measures for the prevention of money laundering such as the creation of registries – including those in tax havens – of the financial devices often used to hide dirty money, which would be open to investigators.

Without such reform, kleptocrats will be free to continue their undeserved shopping spree at the expense of their citizens.

Resources

Transparency International France – advice to NGOs on starting similar cases: English | French

Transparency International working paper – 'Recovering stolen assets: A problem of scope and dimension'

World Bank Stolen Asset Recovery Initiative – report on the challenges faced in recovering stolen assets

Other French organisations working on stolen assets:

Read a blog post on stolen assets by Transparency International's vice-chair, Akere Muna

In April 2011, Transparency International held an open meeting on stolen assets in Cairo that called on the Egyptian government to work with civil society to transparently investigate and recover assets stolen by corrupt leaders and officials.

Transparency International has also called on the G20 governments to quickly freeze and investigate illicit assets.

See Transparency International's Bangkok Declaration calling for greater action to recover stolen assets

Libération: Biens mal acquis : la justice louvoie

L'Express: La justice française saisit 12 comptes de proches de Ben Ali

Financial Times: Tyrants’ Paris: the tour

Press contact(s):

Thomas Coombes
+ 49 30 34 38 20 666
press@transparency.org

Country / Territory - Canada   |   Democratic Republic of the Congo   |   Egypt   |   Equatorial Guinea   |   France   |   Gabon   |   Libya   |   Switzerland   |   Syria   |   Tunisia   |   United Kingdom   |   United States   
Region - Sub-Saharan Africa   |   Middle East and North Africa   |   Americas   |   Europe and Central Asia   
Language(s) - English   
Topic - Asset recovery   |   Financial markets   
Tags - Corruption Perceptions Index   |   SHERPA   |   G20   |   Denis Sassou Nguesso   |   Omar Bongo Ondimba   |   Bangkok Declaration   |   IMF   |   Téodoro Obiang   |   Human Development Report   |   Gregory Ngbwa Mintsa   |   World Bank Stolen Asset Recovery Initiative   

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